1. Theory Of Territorial Nexus
Bharati Vidyapeeth Deemed University
(New Law College)
Pune (Maharashtra)
Divya Khandelwal
LL.M.- 1 year
2. Introduction
• Distribution of powers is an essential feature of
Federalism.
• Power is divided between the states and the centre to
Legislative, Administrative and Financial authorities.
• Centre legislative body + State legislative
body = legislative relations
• Function of legislative body is to make laws.
• Power to make laws include power to give effect to
the law prospectively as well as retrospectively.
• The legislature has power to alter a law
retrospectively.
3. Legislative relations (Article - 245
to 255)
• Constitution of India makes two-fold distribution
of legislative powers :
Legislative
Relations
Territorial
(Article-245)
Subject-
matter
(Article-246)
4. • Territory means boundaries + Nexus means
relations.
• Invoked under two circumstances :
1. Whether a particular state has extra-territorial operation.
2. If there is a territorial nexus between the subject-matter of the
act and the state making the law.
• It signifies that the object to which the law is
applied need not be physically located within the
territorial boundaries, but what is necessary is that it
should have a sufficient territorial connection.
Doctrine of Territorial – Nexus
5. Article – 245 Extent of laws made by
Parliament and by the Legislatures of
States
1) Subject to the provisions of this Constitution,
Parliament may make laws for the whole or any
part of the territory of India, and the Legislative
of a State may make laws for the whole or any
part of the State.
2) No law made by Parliament shall be deemed to be
invalid on the ground that it would have extra-
territorial operation.
6. Wallace v. Income-Tax commissioner,
Bombay
A.I.R. 1948 P.C. 118
• Held that the company could levy an income tax on
the entire income and not only on the portion
accruing from India. The sufficient territorial nexus
is present between the Company and India.
7. A. H. Wadia v. Income-tax Commissioner
A.I.R. 1949 F.C. 18
S.C. Held that, “In the case of Sovereign legislature,
question of extra-territoriality of any enactment
can never be raised in the municipal courts as a
ground for challenging its validity.
The legislation may offend the rules of
International law, may not be recognised by
foreign courts, or there may be practical
difficulties in enforcing them but these are
questions of policy with which the domestic
tribunals are not concerned.”
8. State of Bombay v. R.M.D.C.
A.I.R. 1957 SC 699
• The State of Bombay levy taxes on lotteries and
prize competitions.
• It was held valid because there is sufficient
territorial nexus between the State of Bombay and
Bangalore as it was printed and published in
Bangalore but had wide circulation in Bombay.
9. • Held that there was sufficient territorial nexus and
upheld the Act as valid.
• Whether there is sufficient nexus between the law
and object sought to be taxed will depend upon the
faces and circumstances of a particular case.
Tata Iron and Steel Co. Ltd. v. State of
Bihar
A.I.R. 1958 SC 452
10. • SC held that the Act could affect the trust property
situated outside Bihar, but Appertaining to a trust
situated in Bihar where the trustees functioned.
• What is necessary is that the connection between
the trust and the property appertaining thereto is
real and not illusory and that the religious
institution and the property appertaining thereto
form one integrated whole as one cannot be
dissociated from the other.
State of Bihar v. Charusila Dasi
A.I.R. 1959 SC 1002
11. State of A.P. V. National Thermal Power
Corporation Ltd.
(2002) 5 SCC 203
S.C. Has stated the principle of Territorial Nexus as
follows :
“It is by reference to the ambit or limits of territory by
which the legislative powers vested in the Parliament and
the State Legislatures are divided in Art-245.
Generally speaking, a legislation having extra-territorial
operation can be enacted only by parliament and not
by any State legislature, possibly the only exception
being one where extra-territorial operation of a State
Legislation is sustainable on the ground of territorial
nexus. Such territorial nexus, when pleaded must be
sufficient and real and not illusory.”
12. G.V.K. Inds. Ltd. and Anr. V. Income Tax
Officer and Anr.
(2011) 4 SCC 36
• Held that any law enacted by the parliament with
respect to extra-territorial aspects or causes that
have no nexus with India would be ultra vires
and would be law made for a foreign territory.
13. Sondur Gopal v. Sondur Rajini
A.I.R. 2013 SC 2678
• The general principle underlying of States is that
laws made by one State cannot have operation in
another State.
• A law which has extra-territorial operation cannot
directly be enforced in another State but such a law
is not invalid and saved by Article-245(2) of the
constitution.
14. Conclusion
• Thus there is no general definition of doctrine and
what territorial connection or nexus is necessary for
an application of the law to a particular object .
• For considering and the sufficiency of the territorial
connection involves the following :
i. the connection must be real and not illusory, &
ii. the liability sought to be imposed under the act must be pertinent or
relevant to that connection.
